Inside the shadow influence world

INSIDE THE SHADOW INFLUENCE WORLD — The revelation of over two million dollars in corporate payments to Michael Cohen, President Donald Trump’s attorney and fixer, highlights a world that largely flies under the radar but proved highly lucrative for many in Trump’s orbit in 2017. Corporate interests were desperate to figure out how Trump would operate and who actually had influence in his White House and were willing to pay handsomely for any intel.

POLITICO’s Theodoric Meyer, myself and Lorraine Woellert explore more about this world here: “Cohen made more than $2 million working as a Trump whisperer. But he's far from the only one. … Trump's longtime lawyer and fixer is the latest member of the president's inner circle to cash in on connections by selling insight into how Trump operates.

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“The president's 2016 victory rattled corporations enough that clients were eager to pay top dollar to anyone who could help them understand the administration in its first months. … Cohen and former Trump campaign chief Corey Lewandowski, avoided registering as lobbyists but took on work helping corporate clients understand Trump’s thinking.

EVERYBODY WAS DOING IT — “Everyone was hiring ‘Trump whisperers’ in 2017 — every single hanger-on in the Trump orbit made a fortune in 2017,” one Republican consultant said. “And not necessarily to influence them, just to try to figure out who are the right people to talk to.”

“‘The question was ‘Who is the real influence?; [one GOP] consultant said. ‘Is it Gary Cohn? Steve Bannon? Wilbur Ross? How do we get to Jared and Ivanka? Does anyone know Dina Powell? Does anyone listen to Steven Mnuchin? There’s no point talking to Reince Priebus, right? Every single client we had was trying to figure it out.’”

DEMS DID IT TOO — “Presidential confidantes making use of their connections — even without formally lobbying — is not unique to the Trump era. Jim Messina, a former top aide in Barack Obama's White House, started his own consulting firm, the Messina Group, after managing Obama's reelection campaign. Like Lewandowski, he never registered as a lobbyist.

“‘I hope you will also mention that Seems [sic] to be the same relationship that Jim Messina had with the Obama WH’ Lewandowski wrote in an email to POLIITICO.”

TREASURY LOOKING FOR THE LEAK — One big question is how Michael Avenatti got his hands on the bank records disclosing the Cohen payments. And one theory is that someone leaked a Treasury Department suspicious activity report (SAR) on the transactions, sparking an internal investigation that some are calling a “witch hunt.”

“Delmar said the inspector general is ‘inquiring into allegations’ that certain suspicious activity reports, which are filed with Treasury's Financial Crimes Enforcement Network, might have been ‘improperly disseminated.’ Delmar said he could not predict how long the investigation would take.”

AT&T TRIES TO EXPLAIN — POLITICO’s Steven Overly, John Hendel, and Ashley Gold: “AT&T on Wednesday scrambled to address revelations about a secret financial relationship between the company and … Cohen, as Democratic lawmakers pressed for details on the payments. AT&T on Wednesday told employees in a message obtained by POLITICO that it hired Cohen … to provide insight on Trump's thinking about net neutrality, antitrust enforcement and tax reform.

‘Companies often hire consultants for these purposes, especially at the beginning of a new presidential administration, and we have done so in previous administrations, as well,’ the message states. The company explained its contract with Cohen expired in December 2017. The following month, ‘the media first reported, and AT&T first became aware of, the current controversy surrounding Cohen’” Read more.

COME HEAR JEB HENSARLING! — Very excited that the Morning Money event series is back beginning next Thursday, May 17, at 8:30 a.m. in DC with House Financial Services Chair Jeb Hensarling. Want to know what House bills might follow S. 2155 in the Senate? Want to know who might the next HFSC chair after Hensarling leaves? You’ll want to turn up. RSVP here.

COME SEE MM TODAY AT SMART CITIES — I’ll be moderating a pair of conversations on Thursday at the SmartCities New York conference at Pier 36 in Manhattan. We’ll be talking about public private partnerships on infrastructure and much more. Check it all out here.

ELECTION PREDICTOR: MORTGAGE CREDIT — Columbia Business School professor Charles Calomiris and Georgetown professor Alexis Antoniades have a new study out which they says shows that among the best predictors of presidential outcomes is the availability of mortgage credit.

From a Hill op-ed: “Voters punish the incumbent party if a contraction in mortgage credit supply results in a greater rate of denial in mortgage applications within their county.” Read more.

Michael Cohen cashed in big on his Trump ties. | AP Photo

GOOD THURSDAY MORNING — Victoria Guida (who just celebrated her birthday on Wednesday!) will be driving the bus for Friday’s edition. Email her on vguida@politico.com and follow her on Twitter @vtg2. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

** A message from SIFMA: Nationally, seniors lose an estimated $2.9 billion every year in cases of financial exploitation reported by media outlets, while only an estimated 1 in 44 cases is even reported to authorities. Together, we can do more to protect senior investors. Find out how at www.sifma.org/seniors.**

REACT — American Bridge’s Andrew Bates: “In plain sight, the Trump Administration is dismantling the watchdog agency that protects vulnerable Americans from fraud and abuse committed by predatory lenders, big banks, and credit card companies. Eliminating the CFPB's student loan office is an outrageous continuation of this trend, which has also involved flat-out attacks against the bureau's enforcement efforts and it's transparency with the public.”

DRIVING THE DAY — President Trump holds a rally at 7 p.m. local time this evening in Elkhart, Ind. … House Budget Committee has a hearing at 9 a.m. on ideas for the FY2019 budget resolution … Consumer Prices at 8:30 a.m. excepted to rise 0.3 percent headline and 0.2 percent core …

ALSO TODAY: CNBC DC EVENT — CNBC’s Capital Exchange is taking place at The Hay-Adams in DC from 7:30-9:30am and will feature U.S. Secretary of Commerce Wilbur Ross (Interviewed by CNBC’s Tyler Mathisen) Details

EUROPE FIGHTS BACK ON IRAN DEAL — POLITICO’s David Herszenhorn in Brussels: “European leaders on Wednesday began drawing up plans to preserve the Iran nuclear accord, in defiance of … Trump's Tuesday decision to abandon what he called the "rotten" agreement. The possible action includes legislation that would block Washington from punishing European companies that continue to do business with Iran.

“It reflects Europe’s deep frustration with Trump’s withdrawal from the 2015 deal despite the pleas of its top leaders. Trump’s action has inflamed a transatlantic relationship already strained by his threat to impose tariffs on European products, along with his 2017 withdrawal from the Paris climate accord.” Read more.

ECONOMISTS NOT SO BULLISH ON THE TAX CUTS — POLITICO’s Brian Faler: “Republicans' eagerness to chalk up the strong economy to their recent tax-code revamp has some economists rolling their eyes. Though unemployment is at a 17-year low, some companies have showered workers with bonuses and Republicans are rife with anecdotes of the law helping their constituents, many economists say they don't yet see much evidence of the plan lifting growth.

“While they certainly expect it to help the economy, many say it's way too early to actually see it happening. It will take months, at least, before the effects begin to really show up in the economic data and many say even then the evidence will be more ambiguous than lawmakers suggest.” Read more.

GOLDMAN PUMPS THE BRAKES ON TECH HIRES — Yahoo’s Krystal Hu: “Goldman Sachs, the elite Wall Street bank which has been fiercely competing against Silicon Valley for tech talent, is tapping the breaks on tech division hiring. Elisha Wiesel, Goldman’s chief information officer, spoke about the shift while touting the unit’s growth over the past year at a town hall for company engineers last week. Yahoo Finance obtained a transcript of the talk.” Read more.

MARKETS

GOOD NEWS FOR ENERGY STOCKS — Reuters’ Noel Randewich: “Wall Street surged on Wednesday as surging oil prices boosted energy stocks following …Trump’s decision the previous day to quit a nuclear agreement with Iran. Gains were broad and volume was high, with all but the utilities and telecom sectors advancing as investors who had moved to the sidelines in recent days ahead of Trump’s decision returned to the market. …

“Trump’s decision for the United States pull out of the international agreement aimed at preventing Iran from obtaining a nuclear weapon was good news for investors betting on a rise in oil prices. Crude hit its highest level in 3-1/2 years as investors bet the U.S. withdrawal would increase risks of conflict in the Middle East and curtail global oil supplies. The S&P energy index jumped 2.03 percent, bringing its gain this quarter to 12.6 percent, more than any other sector.” Read more.

IRAN SANCTIONS COULD COST COMPANIES BILLIONS — AP’s David Koenig and Angela Charlton: “European and American companies could lose billions of dollars in commercial deals canceled and a major new export market undercut by the U.S. decision to re-impose sanctions on Iran. … Trump’s decision will likely most hurt aircraft makers, oil companies and auto manufacturers. The final impact, however, remains unclear because of possible exemptions for some companies and even new negotiations on a revised Iran nuclear agreement, experts say.” Read more.

The decision is also adding volatility to emerging-market currencies — WSJ’s Olga Cotaga: “Emerging-market currencies were volatile Wednesday, after President Donald Trump’s decision to pull out of the Iran nuclear deal added to the woes of markets already pressured by a strengthening dollar. The Russian ruble and the South African rand were among the currencies to fall initially but then turn higher; the Turkish lira whipsawed as investors dialed back on risk.

“Through much of this year, most emerging-market assets had been resilient, even as other markets stalled. But recent rises in the U.S. dollar and Treasury yields have dented that performance, raising debt costs and inflation for some developing countries and drawing money back to the U.S. Geopolitical tensions are increasing the pressure as investors look for safer havens, including the dollar. Emerging-markets bonds have also sold off in recent days.” Read more.

And it could kick the gas market while it’s down — Bloomberg’s Ryan Collins and Naureen Malik: “Trump’s decision to scrap the Iran nuclear deal and restore sanctions was great for oil bulls. But for natural gas drillers in America’s hottest shale play, it could be a disaster in the making.

“The highest oil prices in more than three years are poised to boost output from areas like West Texas’ Permian Basin, the most prolific U.S. reservoir of the fuel. That would add to the supply of gas that’s produced alongside crude there, making an existing glut even bigger.” Read more.

VIX LOOKING LIKE ITS OLD SELF — Bloomberg’s Richard Richtmyer: “For five years starting in 2013, it was a world of peace and tranquility for stock investors. Then came the tempests of February, convincing many of them that the days of calm were over. By one measure, they just came back.

“The Cboe Volatility Index closed below 14 for the first time since the equity-market meltdown three months ago triggered a record surge. The gauge, which uses options-trading data to measure implied volatility of S&P 500 stocks, peaked at 37.32 on Feb. 5., wiping out the VelocityShares Daily Inverse VIX Short-Term exchange-traded notes and similar products that allowed investors to bet on continued market calm.” Read more.

FLY AROUND

SCHNEIDERMAN’S FINANCIAL LEGACY LIVES ON — NYT’s Matthew Goldstein: “Mr. Schneiderman’s big accomplishment in going after Wall Street were the billions of dollars in penalties that he helped secure from big banks that had sold flawed mortgage-backed bonds during the run-up to the financial crisis. He ensured that some of that money went to help communities across the state that were overrun by abandoned houses and foreclosures — often referred to as ‘zombie homes.’

“His legal team was one of the first in the nation to target banks for sponsoring nontransparent trading platforms called ‘dark pools,’ which allowed high-speed trading firms to take advantage of investors. In 2016, Mr. Schneiderman and the Securities and Exchange Commission announced a $154 million settlement with Barclays and Credit Suisse to resolve allegations that the banks had permitted traders to misuse their dark pool platforms.” Read more.

ARGENTINA SEEKING IMF BAILOUT — FT’s Benedict Mander and Robin Wigglesworth: “Argentina is seeking a ‘stand-by arrangement’ with the International Monetary Fund, according to the government, signaling its willingness to sign up to one of the organization’s traditional economic adjustment programs — complete with potentially politically controversial conditions and oversight.” Read more.

EX-WALL STREET LAW CLERK HIT WITH PRISON TIME — Reuters’ Jonathan Stempel: “A former clerk at the Wall Street law firm Simpson Thacher & Bartlett was sentence on Wednesday to 37 months in prison for his role in an insider trading ring that passed merger tips on napkins and Post-it notes in New York’s Grand Central Terminal.” Read more.

CEOS RAKING IN THE MONEY — WSJ’s Theo Francis and Jieqian Zhang: “Median pay reached $12.1 million for CEOs of the biggest U.S. companies in 2017, a new post-recession high, as profits and stock prices soared. Most S&P 500 CEOs received raises of 9.7 percent or better last year, according to a WSJ analysis of data from MyLogIQ.” Read more.

ALSO FOR YOUR RADAR

NEW ON THE BOOKSHELF — Kelly Friendly passes along the new tome from Paul Tucker, former number two at the Bank of England and a fellow at the Kennedy School at Harvard: “‘Unelected Power’ tries to find a principled solution to the challenge presented by the growth in our democracies of independent government agencies, such as central banks and regulators, and activist judges, that are formally insulated from day-to-day politics: is there a democratic deficit, and how can we ensure there is not?” Check it out here.

** A message from SIFMA: Did you know financial decision-making skills decline as we age? Unfortunately, financial exploitation of older adults is a serious and growing issue with devastating impact.

A New York State report found that 2/3 of all financial exploitation was committed by family members. Seniors can often lose the entirety of their retirement savings, leaving them unable to maintain independence and coping with significant stress and health impacts. As our country ages - 18% of the nation’s population will be 65+ by 2030 - the scope of this problem can only grow.

It is vital that we protect senior investors from financial exploitation. SIFMA is working with industry members, academics, and state and federal policymakers to advance policies, regulations and resources which enhance senior investor protections. Learn how you can make a difference at www.sifma.org/seniors. **

About The Author : Ben White

Ben White is POLITICO Pro's chief economic correspondent and author of the “Morning Money” column covering the nexus of finance and public policy.

Prior to joining POLITICO in the fall of 2009, Mr. White served as a Wall Street reporter for the New York Times, where he shared a Society of Business Editors and Writers award for breaking news coverage of the financial crisis.

From 2005 to 2007, White was Wall Street correspondent and U.S. Banking Editor at the Financial Times.

White worked at the Washington Post for nine years before joining the FT. He served as national political researcher and research assistant to columnist David S. Broder and later as Wall Street correspondent.

White, a 1994 graduate of Kenyon College, has two sons and lives in New York City.

About The Author : Aubree Eliza Weaver

Aubree Eliza Weaver is a deputy production director for POLITICO Pro, having previously served as a senior web producer. Aubree also co-authors Morning Money, POLITICO's daily morning newsletter on Washington and Wall Street.

She graduated from Le Moyne College in her hometown of Syracuse, N.Y., where she was the editor-in-chief of the school’s newspaper, The Dolphin. As a student, she interned with Time Warner Cable’s Syracuse affiliate, YNN, as a news broadcast intern. Aubree moved to D.C. upon graduating in 2013 to work as a summer program adviser for the Institute on Political Journalism. She was a student in the program in the summer of 2011, when she first fell in love with D.C.